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Definition of 'Declining Balance Method'
A common depreciation-calculation system that involves applying the depreciation rate against the non-depreciated balance. Instead of spreading the cost of the asset evenly over its life, this system expenses the asset at a constant rate, which results in declining depreciation charges each successive period.
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Investopedia explains 'Declining Balance Method'
For example, if an asset that costs $1,000 is depreciated at 25% each year, the deduction is $250.00 in the first year and $187.50 in the second year, and so forth.
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Companies make choices and assumptions in calculating depreciation, and you need to know how these affect the bottom line.
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Appreciate the different methods used to describe how book value is "used up".
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Learn about the components of the statement of financial position and how they relate to each other.
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